Washington (CNN) – Treasury Secretary Timothy Geithner drew a line in the sand over taxes in defense of the Obama administration’s controversial proposal to avoid the fiscal cliff.

In an interview with CNN’s Candy Crowley on "State of the Union," Geithner insisted that any compromise on the plan he presented to congressional Republicans on Thursday, which includes $1.6 trillion dollars in tax revenue, cuts to Medicare, and another $50 billion in stimulus spending, must contain an expiration of the Bush tax cuts for income over $250,000.

“There's not going to be an agreement without rates going up,” Geithner said in the interview, which aired Sunday. “If they are going to force higher rates on virtually all Americans because they're unwilling to let tax rates go up on 2 percent of Americans, then, I mean that's the choice they're going to have to make."

While he maintains the administration will refuse any deal without the tax hikes, Geithner was optimistic about the negotiations, showing room for compromise as well.

“It's a very good plan and we think it's a good basis for these conversations,” he said. “What we did is put forward a very comprehensive, very carefully designed mix of savings and tax rates to help us put us back on a path to stabilizing our debt, fixing our debt and living within our means.”

The fiscal cliff, which begins in January if Congress and the administration fail to come to an agreement over a number of spending issues, includes automatic reductions in defense and non-defense spending, the end of the payroll tax holiday, and the expiration of extended unemployment benefits. Going over the cliff has the potential to set the U.S. back into another recession.

Republican reaction after Thursday's meeting with Geithner sharply conflicted with the secretary’s assessment of the negotiations and the plan itself. A frustrated House Speaker John Boehner said that “we are nowhere.”

“The day after the election, I said the Republican majority would accept new revenue as part of a balanced approach that includes new spending cuts and reforms,” Boehner said. “Now the White House took three weeks to respond with any kind of proposal, and much to my disappointment, it wasn't a serious one.”

Increased revenues were traditionally scorned by Republicans. Boehner put them on the table by offering to close tax loopholes, reform the tax code and lower rates – a significant move for the leader of House Republicans. He says he will not raise any tax rates and the administration proposing them brought the talks to a “stalemate.”

Geithner disagreed with the speaker’s assessment on the negotiations. He said the administration offered $600 billion in cuts to health care and other mandatory programs combined with the cuts still lingering from last year’s debt ceiling deal (which will result in automatic spending cuts without an agreement by the end of the year) make this “a very substantial packet of reforms."

On the $50 billion in proposed stimulus that includes infrastructure spending, the secretary insisted that it is “something we can afford,” calling it a “modest investment in making this country stronger.”

“I think right now, the best thing to do is for them to come to us and say, look, here's what we think makes sense,” Geithner said. “What we can't do is try to figure out what's going to be good for them. They have to come tell us.”

“I think we're far apart still, but I think we're moving closer together,” he said. “This is something we can do. And I think we're going to get there, because there's too much at stake not to get there, not just for the American economy, but for the world economy.”

The secretary acknowledged the difficulty the Republican-controlled House will have passing this deal, opening the door to concessions on the administration’s part.

“They're in a hard place. And they're having a tough time trying to figure out what they can do, what they can get support from their members for. That's understandable,” Geithner said. “This is very difficult for them, and we might need to give them a little more time to figure out where they go next.”

Reflecting on his time at the Treasury (Geithner plans on leaving the administration sometime after a deal on the fiscal cliff is made), the secretary expressed content and optimism over his four years in office.

“I think we're in a much better position than, actually, I thought was realistic, in those darkest days of this financial crisis, when there was a real risk of catastrophic collapse. And I think all Americans should be much more confident today than at any time in the last four or five, six years,” he said. I'm very proud of being part of that, even with all the challenges we have ahead.”

soundoff(218 Responses)

Tax the rich. Tax them to death. And when they die, tax them some more.

December 2, 2012 10:57 am at 10:57 am |

teakiller

Solving the deficit problem will require significant spending cuts, including all entitlement programs. As soon as Obama commits to cuts 2 or 3 times the tax hikes, Boehner can cave on the taxes. The Republicans would be fools to do the tax cuts now with only a promise of addressing spending later.

December 2, 2012 10:57 am at 10:57 am |

Richard

Isnt this the same guy who didn't pay his taxes?

December 2, 2012 10:57 am at 10:57 am |

imputt

No leadership from Obama. No colaboration attempts from the Democrats. More of the same do nothing democratic approach.

December 2, 2012 10:58 am at 10:58 am |

Joe Stecco

If Obama's plan goes through as it is right now this country is doomed. Written in to their plan is the ability for the President alone to raise the debt ceiling going forward without congressional approval. He will spend this country in to total bankruptcy with those type of dictatorial powers!!! If any Congressman or Senator goes along with this plan they are just plain STUPID!

December 2, 2012 10:58 am at 10:58 am |

Disgusted in DC

IMplementing Obama's tax increase funds the government for just 7 days – FACT. It does NOTHING to fix the deficit spending or reduce the debt As for geithner, drawing a line in the sand? The guy couldn't even do his own taxes with Turbo Tax - he should be playing in a sand box, not running Treasury......

Obama is pulling the biggest hoax on America ever with his campaign style BS -- and our children and grandchildren will pay for this

Have you heard anything about spending cuts? NADA. Anything abour Medicare reform? NADA Any specifica goals about how much Obama wants to recude the debt? NADA

December 2, 2012 10:58 am at 10:58 am |

Joe Stecco

If Obama's plan goes through as it is right now this country is doomed. Written in to their plan is the ability for the President alone to raise the debt ceiling going forward without congressional approval. He will spend this country in to total bankruptcy with those type of dictatorial powers!!! If any Congressman or Senator goes along with this plan they are just plain crazy!

Raising taxes on anyone is reckless and ant-American! Stupid people, they don't understand the destruction they cause by raising tax rates. You don't get more tax money, you get less people paying taxes. It's not rocket science. Lower the Tax Rates!

I find it disconcerting and sad that anyone one involved in the last "4'or 5, 6 years" of fiscal policy making is proud or happy about the job they have done. These circumstances that were brought about by poor or no foresite, then rashly patched over with little or no hindsight, lacking any oversite lead to public misfortune and pain. This can only be an intentional obfuscation of the truth going all the way back to the first Bretton Woods agreement and before. There will be no progress made here for the common American nor for the common individual in any other country.... This is a war on the people via the banking industry with a genocidal government as an accomplice. Dark days will become darker until this changes.

December 2, 2012 10:59 am at 10:59 am |

ted

Notice how Geithner will not raise his own taxes...Oh wait.

December 2, 2012 11:00 am at 11:00 am |

John P Smith

Dear Mr. President,

If you cannot provide more than a half package of fiscal reform, it is far better that we go over the fiscal cliff rather than to let future generations pay for our generation's criminal governance and irresponsible spending.

Don't be a scrooge, bless American and show some leadership and courage, before its too late.

Take us over the cliff, the best thing that could happen. It will reduce spending, increase taxes, and that will give us a start on our debt problem. Both sides can blame the other and we can go on down the road

December 2, 2012 11:04 am at 11:04 am |

Tony

Henry Miller, have you noticed? The 47% have become 51%. In the 2012 election, Republicans are the ones with 47% of the vote. If they are not careful, they will be lucky to keep 47% in the next election.

Anyone who wants to increase taxes is not qualified to even speak about economic growth. Even suggesting and an increase in taxes automatically disqualifies someone from being intelligent enough to honestly talk about economic growth. Increasing taxes will kill the economy simple as that. Geithner doesn't pay his taxes, so why should he care what happens???

December 2, 2012 11:06 am at 11:06 am |

Realityblowz

It is going to, so let it happen now. LET IT ALL COLLAPSE! Let the people with working skill sets survive, and the rest shrivel and die. Mother nature had this figured out long ago. Let the strong survive, and quit trying to carry all of the dead weight in this country.

December 2, 2012 11:09 am at 11:09 am |

Wes

ted said:

Notice how Geithner will not raise his own taxes...Oh wait
--------------------------
He will raise it, he just won't pay it.

This is about poverty. The democrats want more poverty, the republicans want less poverty. Republicans understand you can't tax your way to economic growth. Democrats want more poverty and more people reliant on the government for money, transportation, food, shelter, a whole bunch of things.

December 2, 2012 11:09 am at 11:09 am |

Gordo

Big deal.
Taxing the rich is simply a cause célèbre as the incremental revenue is a drop in the bucket vis-a-vis the deficit.

The proposed miniscule cost cutting is little more than cake icing.

December 2, 2012 11:14 am at 11:14 am |

Michael Q

This reminds me of the Republican stand in 2009 when Obama took office, and Obama, mistakenly, tried to compromise and it did not work then. The thing about Republicans is "do it my way or hit the road" theology is now being challenged in being trusted in the give and take of compromise to actually make a deal. They proved in 2009 and until the election of 2012 (where the Republicans actually believed they were going to win) that by stomping their feet and pouting they will get their way. Well, the country can't afford supporting these babies anymore, so Obama now says, either change your stance or pick up your bat and ball and go home because if you don't the people in 2014 will devastate the GOP party to depths they (the Republicans) believe they could never fall. Or, like all those Texas Republican losers who have taken their bat and ball and threatened America with succession! Babies, one and all, aren't they? The American voter gets it more and more every day, why can't the Republicans?

December 2, 2012 11:14 am at 11:14 am |

Ken

Guys (there are hardly any gals in your team anyway) of the GOP. Stop ranting. Get real. You lost the elections big, due to your obstinacy, and living in your own make believe, megalomaniacal world (ala Romney). You would have lost the House too, but for gerrymandering done by your fellows in the States who managed to game the system in 2010. Anyway you lost 10 seats there too, despite the gerrymandering. So take what Obama and Geithner have given to you, and run. If not, you will see the wrath of all Americans whose taxes you fellows are ready to raise to ave the top 2% earners. Shame on you. Shame on your illiteracy. Shame on you for being asleep all the time.

December 2, 2012 11:15 am at 11:15 am |

JudiS98

How hard is it for you people who say want the tax ratelowered to understand that if you don't have money coming in, you cannot pay down the debt. If you don't get income, you can't pay your bills. Same scenario! Stay away from my social security. I and my employer paid in this money and it is not an entitlement. The rich reap billions of dollars in unearned income in this country and they need they need to pay taxes on it. Clinton era tax rates were good for the country. Go back to those rates. Also, stop spending money on stupid stuff, like finding out why the mouse likes cheese!

December 2, 2012 11:15 am at 11:15 am |

mahantiam

To properly care for the poor I don't think that taxing the rich will be sufficient. If we really are committed to taking care of the less fortunate we will need to raise taxes on all people who pay taxes.

December 2, 2012 11:15 am at 11:15 am |

me

And The Republican Plan is? Raise Taxes on everyone?! Gee wont that Break their Norquist Pledge? You have 2 unfunded wars and slash taxes. the bill comes due and the rich get the first bill. everyone will pay more but you just cant raise taxes on everyone and slash spending (like the Fiscal Cliff) without causing a recession. This needs to be done in baby steps. As for the rich. come on its not that great a tax hike. Just buy one less home this year.

December 2, 2012 11:16 am at 11:16 am |

Shelly

When my personal budge needs adjusted I look at what can be decreased. Why are the Democrates asking to increase their income from our backs and not decrease what they are spending? This is just stupid! If I hit the top of my personal budget I can't go out to get a loan so I can spend more! That is what they are doing. If they say it's more complicated than that they aren't smart enough to do the JOB!